Correlation Between Ecofin Global and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Ecofin Global and Wizz Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ecofin Global and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofin Global Utilities and Wizz Air Holdings, you can compare the effects of market volatilities on Ecofin Global and Wizz Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ecofin Global with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and Wizz Air.
Diversification Opportunities for Ecofin Global and Wizz Air
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ecofin and Wizz is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings and Ecofin Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ecofin Global Utilities are associated (or correlated) with Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of Ecofin Global i.e., Ecofin Global and Wizz Air go up and down completely randomly.
Pair Corralation between Ecofin Global and Wizz Air
Assuming the 90 days trading horizon Ecofin Global is expected to generate 1.22 times less return on investment than Wizz Air. But when comparing it to its historical volatility, Ecofin Global Utilities is 3.66 times less risky than Wizz Air. It trades about 0.09 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 125,100 in Wizz Air Holdings on September 3, 2024 and sell it today you would earn a total of 3,600 from holding Wizz Air Holdings or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. Wizz Air Holdings
Performance |
| Timeline |
| Ecofin Global Utilities |
| Wizz Air Holdings |
Ecofin Global and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and Wizz Air
The main advantage of trading using opposite Ecofin Global and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global position performs unexpectedly, Wizz Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wizz Air will offset losses from the drop in Wizz Air's long position.| Ecofin Global vs. Zoom Video Communications | Ecofin Global vs. Zanaga Iron Ore | Ecofin Global vs. Batm Advanced Communications | Ecofin Global vs. Qurate Retail Series |
| Wizz Air vs. Cornish Metals | Wizz Air vs. Hansa Investment | Wizz Air vs. Gear4music Plc | Wizz Air vs. Panther Metals PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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